The prices of liquid staking tokens Lido Finance ($LDO) and Rocket Pool ($RPL) have been rallying over the past few weeks as withdrawals of Ethereum ($ETH) staked on the network move closer to being a reality.
According to market data, over the past week, the price of Lido Finance’s native token has moved up nearly 60%, while Rocket Pool has moved up around 23%, at a time in which most other top cryptocurrencies mostly moved sideways. Bitcoin ($BTC) rose around 3.3% over the same period, while Ethereum moved up 9%.
Ever since the Beacon Chain was launched, Ethereum token holders have been able to stake their $ETH on the network in return for fees, awarded to them for validating transactions on the network. The funds, however, aren’t yet withdrawable. Ethereum’s mainnet merged with the Beacon Chain late last year.
To become a validator on Ethereum’s Proof-of-Stake network, users have to stake 32 ETH, at the time of writing worth around $42,400.
Liquid staking solutions such as Lido Finance and Rocket Pool allow users to stake significantly less and maintain their liquidity, through the issuance of tokens representing the staked funds. Lido, for example, issues stETH for every staked ETH.
The protocol recently became the largest in decentralized finance (DeFi) by total value locked, after surpassing MakerDAO, the protocol behind the popular cryptocurrency-backed stablecoin DAI.
In November 2022, Lido said it had been collecting over $1 million in fees per day since October 2022, as its popularity surged. The price of its native token and those of other similar protocols has been rising even as Ethereum’s developers move closer to enabling withdrawals on Ethereum.
In a recent core developers call, Ethereum’s developers started planning the launch of a testnet for the Shanghai upgrade – which will focus on staked Ether withdrawals – to February.
The planned launch of Shanghai on the mainnet is set for sometime in March. During the call, developers also agreed not to consider adding Ethereum Virtual Machine Object Format (EOF) — a proposed improvement to the blockchain’s EVM programming environment – over concerns it could delay the Shanghai upgrade.
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